Tax concerns with DVC purchase

[mef78]

Will someone please explain to me how DVC ownership affects your federal/state/city taxes? I've never had a mortgage, so this would be a first for me.

 

[WithDisneySpirit]

To my knowledge, the only bonus to your taxes is that you can take a deduction for the real estate taxes you will pay as a part of your maintenance fees. This is not a big deduction but it is something

 

[simpilotswife]

If you finance through Disney you should be able to deduct the interest as mortgage interest. You need to consult with your tax advisor.

 

[dianeschlicht]

Loan interest and property tax paid are both deductable on your Federal income tax as long as it does not cause you to exceed the specific threshold set. (Sorry, I don't remeber the threshold but it is fairly high). Each state might be different on the ability to deduct those same things on your state income tax. Here in Minnesota, we can.

 

[WithDisneySpirit]

Thank goodness, some other posters came to play You would think as a mortgage loan officer, I would have considered this...but we paid cash, so I wasn't thinking well this am

 

[crisi]

The property tax deduction and the mortgage interest deduction are likely to be so small that unless you already itemize, there will be no benefit at all. If you are on the cusp between itemizing and not, it may push you over - although the extra paperwork hassle probably won't be worthwhile.

 

[TnRobin]

Keep in mind for any loan interest to be deductible, the loan must be secured by a real estate interest. Therefore that loan either needs to be a home equity loan on your exisiting house or the loan has to be secured by the DVC property itself (Disney is the only lender that will secure the loan this way as far as I know).

 

[mef78]

Thanks everyone! I'll discuss it with my tax advisor before I jump into it, but your responses have been extremely helpful.

 

[pklein09]

The only effect buying DVC will have on your federal taxes is the small deduction for mortgate interest (if you finance) and your portion of property taxes. It should have no effect whatsoever on your city taxes because you don't fill out a city tax return (at least no city I know of has a tax return). As for the state return, they vary. I know NJ and NY state returns aren't effected.